State Department Announces Plans for New Bureau for Energy Issues

The State Department recently announced its first ever Quadrennial Diplomacy and Development Review (QDDR). Announced with great fanfare by Secretary Clinton, the document lays out amongst other plans Clinton’s intention to establish a new Bureau of Energy Resources in 2011. The stated purpose of the new bureau is to “bring together under a single Assistant Secretary State’s diplomatic and programmatic efforts on oil, natural gas, coal, electricity, renewable energy, transparent energy governance, strategic resources, and energy poverty.”

The QDDR talks a lot about global cooperation on energy issues, not surprising for a document written by diplomats, but what it does not directly deal with is how the new bureau will address international competition for access to resources that is taking place on a global scale. Although we tend to think of the U.S. oil and gas super majors as large players on the world stage the truth is that 88% of oil and gas reserves are controlled by state owned oil companies, mostly in the Middle East. Chinese companies are aggressively competing for access to oil and gas resources around the world and in the last year these companies accounted for one-fifth of all global deal activity in the sector. The Chinese State is offering low cost loans, tens of billions of dollars of infrastructure investment, and in some cases are alleged to be providing payments and other kinds of assistance directly to the families of officials in countries where it seeks access to natural resources. Working with non-U.S. companies that are state owned is often seen as cementing geopolitical alliances in a way that allowing privately held American energy companies access to reserves is not.

Ideas On Energy will be following the formation and activities of this new bureau closely. In the meantime, we would welcome readers’ comments on what they think the State Department should be doing overseas to better promote U.S. energy interests.